Korea First Bank Q1 Results

Standard Chartered PLC
10 May 2005

            Announcement by Korea First Bank of its Q1 2005 Results

On 15 April 2005, Standard Chartered PLC ('the company') announced that it had
completed the acquisition of Korea First Bank.

The following is a copy of an announcement released today by Korea First Bank,
reporting their results for the first quarter ended 31 March 2005.

The Company is issuing this announcement for information purposes only.

  'Korea First Bank reports 1Q net income of KRW42 billion compared with KRW28
                               billion in 1Q 2004


  • Income before tax increases 33.2% to KRW53.4 billion in 1Q 2005 from
    KRW40.1 billion in 1Q 2004

  • Following acquisition by Standard Chartered long term credit rating
    improves three notches to A- by S&P and two notches to A by Fitch

  • NPL ratio of 1.37% at March 31, 2005

  • Strong BIS capital ratio of 11.73%

  • Record pricing for EUR500 million MBS issuance

Korea First Bank today announced net income of W42.0 billion for 1Q 2005, an
improvement of W14.0 billion, or 50%, from 1Q 2004. The 1Q 2005 results reflect
continued improvement in the credit environment in Korea with the total
provision for credit losses improving W35.2 billion, driving an increase in net
operating income of KRW22.3 billion or 55.3%.


Average interest earning assets grew KRW3.7 trillion to KRW39.2 trillion in 1Q
2005 from KRW35.5 trillion in 1Q 2004 driven by continued growth in mortgage
lending which grew KRW4.2 trillion, or 35% to KRW16.0 trillion (growth analysis
excludes the average balance of securitized assets of KRW1.7 trillion which were
originated and are managed by the Bank). Net interest margin decreased to 2.11%,
from 2.38% in 1Q 2004, due to the decreasing interest rate environment coupled
with growth of lower risk mortgage lending. Total revenue of KRW252.7 billion in
1Q 2005 decreased compared with KRW261.7 billion in 1Q 2004 as a 10.3% increase
in average interest earning assets was offset by a 27 basis point decrease in
the net interest margin.


Net fee income decreased KRW2.5 billion, or 4.9%, to KRW48.7 billion in 1Q 2005
as a result of a provision for potential claims which are netted against fee
income. There were increases in servicing fees, foreign exchange income and
guarantee fees; however, card fees decreased due to a reduction in card spending
brought about by the Bank's prudent approach to unsecured lending in a market
which is still recuperating from the credit card crisis. Operating expenses
increased by a modest KRW4.0 billion, or 2.6%, to KRW 156.1 billion in 1Q 2005
and provisions for credit losses more than halved to KRW34.1 billion primarily
from improvements in card receivables and unsecured consumer loans. Income
before tax increased by KRW13.3 billion, or 33.2%, to KRW53.4 billion in 1Q 2005
after the effect of non operating expenses which included losses on the sales of
NPLs of KRW7.9 billion. The Bank's NPL sales program facilitates the sale of
unsecured consumer NPLs maintaining the Bank's clean balance sheet.


The first quarter saw Standard Chartered Bank acquire KFB after its successful
turnaround and return to profitability. Standard Chartered has demonstrated its
commitment to Korea with the investment in KFB being both the largest foreign
direct investment into the Korean financial services industry as well as the
biggest acquisition in the history of Standard Chartered Bank. 'We will build
our growth with consumers and corporations on strong relationships, product
innovation and service excellence. Korean companies will be able to use our
network in 56 countries around the world benefiting from our long presence and
in depth knowledge of the environments. Standard Chartered's success is based on
balanced wholesale and consumer banking growth. We will bring our business model
to our Korean operations as well,' said John Filmeridis, the Bank's new
President and Chief Executive Officer. Since the acquisition, KFB's long term
credit rating has improved three notches to A- by Standard & Poor's and two
notches to A by Fitch.


KFB remains one of the best capitalized financial institutions in Korea with a
tier 1 capital ratio of 7.22% and a total capital adequacy ratio of 11.73% at
March 31, 2005. These levels are appreciably higher than the regulatory
requirements for well-capitalized institutions, notwithstanding the strong asset
growth during the year. The maintenance of appropriate levels of capital is a
management priority as capital provides a solid foundation for the future
anticipated asset growth and promotes depositor and investor confidence.

During the past year KFB has continued its focus on mortgage lending
concentrating on product innovation with a view of meeting customer needs. This
continued focus and innovation has resulted in further growth in total mortgage
loans which increased by 45% to KRW18.1 trillion as of March 31, 2005 (including
loans securitized in the Bank's four mortgage-backed securities issuances). This
growth has built a strong foundation for growth in profitability into the future
and has also provided the basis of the Bank's mortgage backed securities ('MBS')
issuance program. In its MBS issuance program the Bank utilizes its mortgage
assets to generate funding at competitive rates while at the same time
contributing to effective asset liability management. During the past quarter
the Bank completed its fourth mortgage backed securities issuance pricing EUR500
million of AAA rated, MBIA wrapped securities at Euribor+13bps comparing very
favourably to European, UK and Australian issues.

Korea First Bank is the nation's 7th largest bank with total assets of KRW44.1
trillion at March 31, 2005. It has over 3.5 million customers served through its
nationwide network of 406 branches and 3 overseas units.


Key financial indicators:



                                                                                                Banking A/C

                                                                                            Better / (Worse)
Won in Billions / %                                      1Q 2005         1Q 2004 *          Amt             %

Net interest income                                         204.0           210.4           (6.4)         (3.0)
Net fees and commissions                                     48.7            51.2           (2.5)         (4.9)
Total revenue                                               252.7           261.7           (9.0)         (3.4)
Operating expense                                           156.1           152.1           (4.0)         (2.6)
Operating margin                                             96.6           109.6          (13.0)        (11.9)
Provision for credit losses                                  34.1            69.3            35.2          50.8
Net operating income                                         62.6            40.3            22.3          55.3
Net non-operating income/(expense)                          (9.1)           (0.2)           (8.9)           N/M
Income before income tax                                     53.4            40.1            13.3          33.2
Current income tax expense                                   19.5             0.2          (19.3)           N/M
Deferred income tax expense/(benefit)                       (8.0)            11.9            19.9         167.2
Income tax expense/(benefit)                                 11.5            12.1             0.6           5.0
Net income                                                   42.0            28.0            14.0          50.0

* Certain reclassifications and changes in statement format have been made to
the 1Q 2004 financial statements to conform with Korean GAAP and internal policy
changes as detailed in the 2004 annual report and accounts.'

For further information please contact:

Cindy Tang, Head of Media Relations

[phone]

Romy Murray, Head of Investor Relations

[phone]

Betty Ku, Head of Corporate Affairs, Hong Kong

Tel [phone]


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